ASDION (0068) - Asdion moves into logistics
Tuesday, 14 April 2015
PETALING JAYA: Asdion Bhd is looking to its newly acquired brick-and-mortar business of logistics to steer its way out of a loss-making streak that has come about from its original seemingly sexy business of software programming.
Newly appointed executive director Datuk Mohamed Ridzuan Nor Md, who joined the Asdion board last week, expects the company to return to the black within the next six months due to earnings from TAZ Logistics Sdn Bhd.
“TAZ Logistics is already profitable, and the earnings should be immediately reflected in Asdion,” said Ridzuan.
In February, Asdion paid RM6mil cash to purchase 51% of TAZ from Ridzuan, who is TAZ’s director and major shareholder.
Following the exercise, Ridzuan was appointed to the board to help Asdion move toward its new business direction.
Meanwhile, the younger brother of the Sultan of Pahang, Sultan Ahmad Shah – Tengku Azlan Sultan Abu Bakar – has also been appointed to the board as its chairman.
“There will be a transition period for Asdion. Eventually, if we can justify to Bursa Malaysia that the IT business remains loss-making, we may be allowed to take it out from the company and fully focus on logistics, being the main earnings driver,” Ridzuan told StarBiz during a lunch meeting yesterday.
Ridzuan, a former investment banker who had a stint with shipping firm MISC Bhd prior to establishing TAZ, said plans were already being put in place to grow the current logistics business, which is focused at Kuantan Port.
“Of course, we are already talking about growing the business. While our core business remains dry bulk cargo stevedoring, which involves the unloading of cargoes from vessels, we are looking at the other components of logistics like warehousing.
“We hope to eventually become a complete logistics solutions provider.”
Kuantan Port is operated by Kuantan Port Consortium Sdn Bhd (KPC). TAZ is among the three active licensed logistics companies mandated by KPC to handle cargo coming through the port.
The licence is renewable every year.
TAZ was established in 2014, but only started operations about two months ago after obtaining the relevant licence from KPC. So far, its gross earnings stand at about half a million ringgit.
In order to expand, Asdion may need to undergo some fund-raising exercises, but these remain preliminary plans.
“We need to first prove that this is a proper and stable business before we can go on to the next stage,” said Ridzuan.
Collectively, the three companies at Kuantan Port handle some two million tonnes of cargo such as fertilisers per month worth over RM40mil, according to Ridzuan.
“We expect the amount of cargo transported to jump at least five-fold once the construction of a new 4.7-km-long Kuantan breakwater structure, which will enable more and larger vessels to come in and out of Kuantan Port, is completed in 2016,” Ridzuan said.
He said net profit margins for the logistics business were relatively “substantial”, at above 20%, depending on how costs were controlled.
“The demand for logistics is always there ... in fact, in an environment of lower oil prices, we stand to benefit as oil forms a huge chunk of total logistics cost.”
Asdion’s share price shot up 11.25% to 89 sen at yesterday’s close, presumably as the market digested the new appointments to the company’s board of directors.
The stock was at the 60-sen level in late January, just before the announcement of the purchase of TAZ was made.
Asdion was listed in 2005 on the-then Mesdaq market. It was one of the many software companies taking advantage of the software and IT craze of that era.
However, it never quite made it as one of the stars among IT companies, partly owing to it being a generic accounting software maker.
http://www.thestar.com.my
Tuesday, 14 April 2015
PETALING JAYA: Asdion Bhd is looking to its newly acquired brick-and-mortar business of logistics to steer its way out of a loss-making streak that has come about from its original seemingly sexy business of software programming.
Newly appointed executive director Datuk Mohamed Ridzuan Nor Md, who joined the Asdion board last week, expects the company to return to the black within the next six months due to earnings from TAZ Logistics Sdn Bhd.
“TAZ Logistics is already profitable, and the earnings should be immediately reflected in Asdion,” said Ridzuan.
In February, Asdion paid RM6mil cash to purchase 51% of TAZ from Ridzuan, who is TAZ’s director and major shareholder.
Following the exercise, Ridzuan was appointed to the board to help Asdion move toward its new business direction.
Meanwhile, the younger brother of the Sultan of Pahang, Sultan Ahmad Shah – Tengku Azlan Sultan Abu Bakar – has also been appointed to the board as its chairman.
“There will be a transition period for Asdion. Eventually, if we can justify to Bursa Malaysia that the IT business remains loss-making, we may be allowed to take it out from the company and fully focus on logistics, being the main earnings driver,” Ridzuan told StarBiz during a lunch meeting yesterday.
Ridzuan, a former investment banker who had a stint with shipping firm MISC Bhd prior to establishing TAZ, said plans were already being put in place to grow the current logistics business, which is focused at Kuantan Port.
“Of course, we are already talking about growing the business. While our core business remains dry bulk cargo stevedoring, which involves the unloading of cargoes from vessels, we are looking at the other components of logistics like warehousing.
“We hope to eventually become a complete logistics solutions provider.”
Kuantan Port is operated by Kuantan Port Consortium Sdn Bhd (KPC). TAZ is among the three active licensed logistics companies mandated by KPC to handle cargo coming through the port.
The licence is renewable every year.
TAZ was established in 2014, but only started operations about two months ago after obtaining the relevant licence from KPC. So far, its gross earnings stand at about half a million ringgit.
In order to expand, Asdion may need to undergo some fund-raising exercises, but these remain preliminary plans.
“We need to first prove that this is a proper and stable business before we can go on to the next stage,” said Ridzuan.
Collectively, the three companies at Kuantan Port handle some two million tonnes of cargo such as fertilisers per month worth over RM40mil, according to Ridzuan.
“We expect the amount of cargo transported to jump at least five-fold once the construction of a new 4.7-km-long Kuantan breakwater structure, which will enable more and larger vessels to come in and out of Kuantan Port, is completed in 2016,” Ridzuan said.
He said net profit margins for the logistics business were relatively “substantial”, at above 20%, depending on how costs were controlled.
“The demand for logistics is always there ... in fact, in an environment of lower oil prices, we stand to benefit as oil forms a huge chunk of total logistics cost.”
Asdion’s share price shot up 11.25% to 89 sen at yesterday’s close, presumably as the market digested the new appointments to the company’s board of directors.
The stock was at the 60-sen level in late January, just before the announcement of the purchase of TAZ was made.
Asdion was listed in 2005 on the-then Mesdaq market. It was one of the many software companies taking advantage of the software and IT craze of that era.
However, it never quite made it as one of the stars among IT companies, partly owing to it being a generic accounting software maker.
http://www.thestar.com.my
